Process: 518/2016-T

Date: February 28, 2017

Tax Type: IMT

Source: Original CAAD Decision

Summary

CAAD Arbitral Decision 518/2016-T addresses whether the IMT (Municipal Property Transfer Tax) exemption under Article 270(2) of the Portuguese Insolvency Code (CIRE) applies to asset acquisitions in individual insolvency proceedings. The claimant, A... SA, acquired two residential property fractions through insolvency proceedings involving natural persons (individuals B... and C...). Initially, the Tax Authority automatically recognized the IMT exemption. However, the Authority later issued an additional assessment, arguing that Article 270(2) CIRE only exempts transfers from 'insolvent enterprises' and does not cover insolvency of natural persons. The company paid the assessed tax and filed an administrative complaint (reclamação graciosa), which was dismissed. Following this dismissal, the claimant initiated arbitration proceedings at CAAD under the RJAT regime, challenging the legality of the additional IMT assessment. The core legal issue concerns the interpretation of 'insolvent enterprise' in Article 270(2) CIRE—specifically whether this exemption provision extends to insolvency proceedings of individuals or is restricted solely to corporate insolvencies. The arbitral tribunal, constituted as a sole arbitrator, accepted jurisdiction over the dispute as a matter of tax law, dispensing with oral hearings since only legal interpretation was at issue. This case exemplifies the arbitration procedure available to taxpayers contesting IMT assessments after exhausting administrative remedies, and highlights the critical distinction between individual and corporate insolvency for tax exemption purposes under Portuguese law.

Full Decision

ARBITRAL DECISION

Claimant: A…, SA

Respondent: Tax and Customs Authority

I – REPORT

A) The Parties and Constitution of the Arbitral Tribunal

1. A…, SA, collective person no. …, with registered office at …, no. …, parish of …, …-… Porto, hereinafter referred to as "Claimant", filed a petition for constitution of an Arbitral Tribunal, pursuant to the provisions of paragraph a) of no. 1 of article 2, no. 1, paragraph a), article 3, no. 1, article 6, no. 1, and article 10, no. 1, paragraph a), of Decree-Law no. 10/2011, of 20 January, hereinafter referred to as "RJAT", to challenge the additional assessment of Municipal Tax on Onerous Transfer of Immovable Property (IMT) no. …, in which the Tax and Customs Authority is the Respondent, hereinafter referred to as "TA". The Claimant seeks a declaration of the illegality of the assessment and the ruling that dismissed the administrative complaint filed by the claimant and its annulment with the legal consequences thereof.

2. The petition for constitution of the arbitral tribunal was submitted on 25-08-2016, was accepted by the President of CAAD on 26-08-2016, and the Tax and Customs Authority was immediately notified of its submission. Pursuant to the provisions of paragraph a) of no. 2 of article 6 and paragraph b) of no. 1 of article 11 of the RJAT, as amended by article 228 of Law no. 66-B/2012, of 31 December, the Deontological Council designated the undersigned arbitrator on 03-11-2016 to serve as arbitrator in the sole arbitral tribunal. The parties were immediately notified of this designation and did not manifest any intent to refuse the designation of the arbitrators indicated, in accordance with the combined provisions of article 11, no. 1, paragraphs a) and b) of the RJAT and articles 6 and 7 of the Deontological Code. Thus, in accordance with the provisions of paragraph c) of no. 1 of article 11 of the RJAT, as amended by article 228 of Law no. 66-B/2012, of 31 December, the sole arbitral tribunal was constituted on 18-11-2016 and, on the same date, an arbitral ruling was issued in accordance with the provisions of article 17 of the RJAT, and the TA was notified to submit its defence within the statutory period.

3. The Tax and Customs Authority responded on 21-12-2016 and attached the respective administrative file (AF) to the case. In its response, which is deemed to be fully reproduced herein, the TA contends for the legality of the challenged acts and for the dismissal of the petition. It requests that the meeting provided for in article 18 of the RJAT be dispensed with as unnecessary, as well as the submission of written arguments, given that the documentary evidence attached to the case is sufficient to render a decision, which concerns exclusively matters of law.

4. No exceptions were raised and no witness evidence was requested, the issues to be decided by the tribunal being exclusively matters of law. Thus, on 16-11-2016, an arbitral ruling was issued dispensing with the meeting of article 18 and fixing a deadline for optional written arguments to be submitted within equal and successive periods of 15 days for each of the parties, and a date was fixed for rendering the arbitral decision by 28-02-2017. The Claimant submitted a motion on 03.01.2017 to renew all arguments raised in the initial petition. The Respondent did not submit written arguments.

B) PROCEDURAL PRESUPPOSITIONS:

5. The arbitral tribunal was duly constituted. The parties possess legal personality and capacity, are legitimate and are represented (articles 4 and 10, no. 2, of the same decree and article 1 of Ordinance no. 112-A/2011, of 22 March). The proceedings do not suffer from nullities that would prevent knowledge of the merits of the case.

6. The relevant factual matters must be assessed and the merits of the petition must be decided.

II. Matters of Fact

A) Proven Facts

7. Based on the elements contained in the proceedings attached to the case, the following relevant facts are considered proven for the assessment of the merits of the case:

a) The Claimant A… SA acquired the autonomous fraction designated by the letter "H", intended for residential use, of the urban property under the regime of horizontal property, located at …, no. …, Parish …, Municipality of Amadora, described in the … Property Registry Office of Amadora under the number … and registered in the respective urban property matrix under article …;

b) The Claimant acquired on the same date the autonomous fraction designated by the letters "AA", intended for residential use, under the regime of horizontal property, located at …, parish of …, Municipality of Sintra, described in the Property Registry Office of … under the number … and registered in the property matrix of the aforementioned parish under article …;

c) The acquisition of the fractions described above in a) and b) were acquired by the Claimant in the context of the insolvency proceedings of B… and C…, which took place in the Court of the Large Lisbon Northwest District, Sintra, Commercial Court, under no. .../12.7T2SNT;

d) The properties in question were listed and seized for the insolvent estate, and the Claimant acquired them for the price of €142,000.00;

e) The Claimant submitted the appropriate acquisition declaration to the competent Tax Office, prior to the adjudication of the properties, for purposes of assessment of the IMT and Stamp Tax (IS) owed, in which it noted the acquisition in the context of insolvency proceedings, exempt by virtue of art. 270, no. 2 of the Code of Insolvency and Business Recovery (CIRE);

f) By virtue of this type of acquisition, the exemption from IMT provided for in article 270 of the Code of Insolvency and Business Recovery ("CIRE") was automatically recognized for the Claimant, and thus no tax was assessed with reference to that operation;

g) The Claimant was notified on 01-10-2015 of the official communication attached to the case as document no. 1 appended to the arbitral petition, which requires payment of the outstanding IMT;

h) This notification states that, in the view of the services, there was an incorrect application of the IMT exemption in the context of that operation, since the acquisition of the property took place in the context of insolvency proceedings of a natural person, and the necessary conditions for the application of no. 2 of article 270 of the CIRE would not have been met, which refers to the concept of "insolvent enterprise";

i) On 19-02-2016 the Claimant made payment of the assessed tax;

j) On 19-05-2016 the Claimant filed an administrative complaint, which was dismissed on the ground already mentioned in h), and was notified of the final dismissal ruling on 04-08-2016, following prior notification in the context of the right to be heard.

k) On 25-08-2016 the Claimant filed the present petition for constitution of an arbitral tribunal, in which it challenges the assessment of IMT for the fraction "AA", which was the subject of review in the administrative complaint proceedings, and which was subject to a dismissal ruling.

B) Facts Not Proven

8. There are no facts with relevance to the assessment of the merits of the case that are considered to be unproven.

C) Basis for Fixing the Matters of Fact

9. The proven facts are based on documents submitted to the case by the Claimant, not contested by the Respondent and confirmed by the administrative file (AF) submitted by the TA, whereby there are no contested facts remaining. There is no disagreement between the parties as to the facts mentioned in the case, but rather exclusively as to the legal issue underlying the challenged assessment. It should be noted that the matters of fact on which the Tribunal has the duty to rule are not all that were alleged and proven, but only those considered relevant or of interest or relevance for the decision (See articles 591, 592, 596 and 607 of the Code of Civil Procedure and 123-2 of the Code of Tax Procedure, applicable by force of article 29 of the RJAT).

III - Matters of Law

10. In summary, from the position of the parties assumed in the case and from the summary of the matters of fact set forth, the issue to be decided is whether the purchase of one or several immovable properties, in the context of a liquidation process of the insolvent estate of a natural person, is (or is not) exempt from IMT, pursuant to the provisions of article 270, no. 2 of the CIRE.

In support of its petition, the Claimant invokes, in defense of its right to the IMT exemption in the acquisition of the properties identified above, that this benefit results from the provisions of no. 2 of article 270 of the CIRE. It contends that this provision exempts from IMT not only in the acquisition of the entirety of the assets of the insolvent (which may include one or more immovable properties), but also in onerous transmissions of immovable properties, by sale, exchange or cession of the enterprise or its establishments comprised in the context of insolvency, payment or recovery plans or carried out in the context of the liquidation of the insolvent estate, whether it is an insolvency of an enterprise or a natural person.

11. For its part, the TA proceeded to assess the IMT challenged in the present case, following a subsequent tax audit procedure to confirm the requirements of the provision contained in article 270, no. 2 of the CIRE, having ascertained that the properties in question, intended for residential use, were acquired in the context of insolvency proceedings of a natural person, considering that this situation does not fall within the scope of that provision. In accordance with this understanding, the TA contended for the legality of the assessment act, in accordance with the response submitted to the case which is hereby reproduced.

12. The transmission in question is, without doubt, a transmission effected in the context of personal insolvency proceedings. Having examined the arbitral petition, it is certain that much of the argumentation advanced by the Claimant concerns the question of whether the exemption regime provided for in no. 2 of art. 270 of the CIRE applies in the case of acquisition of the entirety of the assets of the insolvent estate, and violates the letter and spirit of the law, illegally restricting the right to the exemption enshrined therein, on which arbitral jurisprudence and our superior courts have pronounced themselves affirmatively. However, this is not the issue relevant for decision in the present case.

With reference to the application of the IMT exemption regime provided for in article 270, no. 2, two distinct issues have been raised, both already recurrent in the jurisprudence of our administrative and tax courts, as well as arbitral courts. Thus, two issues have been extensively discussed:

- the question of whether the exemption provided for in article 270, no. 2 of the CIRE operates only and exclusively in the case of acquisition of the entirety of the assets of the enterprise or establishment, regarding which arbitral jurisprudence, as well as that of our superior courts, has been to the effect of recognizing the exemption in any of these situations;

- and the question of whether the exemption operates indiscriminately, whether it is an insolvency of an enterprise or a natural person.

For the decision of the present case, given the basis for the assessment of the tax and the ruling dismissing the administrative complaint, only this second issue is relevant since the basis for the assessment is precisely that the acquisitions took place in the context of personal insolvency and the properties acquired are intended for personal use, "residential", of the insolvents and not for any business purpose.

13. In the arbitral petition, the Claimant alludes to the controversy surrounding the first question and invokes arguments that have been accepted in arbitral and superior jurisprudence, as already mentioned. However, the basis invoked for the additional assessment of tax made following tax audit of the elements declared by the Claimant is that relating to the second issue set forth.

Thus, the TA argues in defense of its position that article 270, no. 2 of the CIRE explicitly refers to the concept of enterprise, and therefore does not apply to acquisitions of immovable properties occurring in the context of insolvency proceedings of a natural person.

In other words, the manner in which the Claimant frames the issue rests from the outset on a misunderstanding as to the basis invoked by the TA to proceed with the assessment of the tax. This, indeed, is the only legal issue to be decided in order to determine whether the challenged assessment is or is not illegal.

14. In this regard, it is important to note that it was proven in the case that both properties acquired are residential, and it was neither alleged nor demonstrated that the insolvents engaged in any activity of an entrepreneurial or commercial nature that would require us to examine the concept of enterprise in greater detail. It is known, however, that the concept of enterprise includes the type of enterprise constituted in the form of a legal person as well as, pursuant to the provisions of commercial law, cases in which such commercial and/or industrial activity is conducted by a natural person and may fall within the concept of enterprise provided for in art. 230 of the Commercial Code.

In the case of the present proceedings, however, the proven facts leave no doubt as to the nature of the insolvency proceedings in question and the strictly personal purpose (residential use) of the adjudicated properties.

THEREFORE,

15. Article 270 of the Code of Insolvency and Business Recovery establishes the following:

Article 270

Benefit relating to the municipal tax on onerous transfers of immovable property

1 - The following transmissions of immovable property are exempt from the municipal tax on onerous transfers of immovable property, comprised in any insolvency, payment or recovery plan:

a) Those intended for the constitution of a new company or companies and the realization of its capital;

b) Those intended for the realization of the increase in capital of the debtor company;

c) Those arising from payment in kind of company assets and the cession of assets to creditors.

2 - The following are also exempt from the municipal tax on onerous transfers of immovable property: acts of sale, exchange or cession of the enterprise or its establishments comprised in the context of insolvency, payment or recovery plans or carried out in the context of the liquidation of the insolvent estate." (emphasis added)

As expressly results from the letter of the law, the exemption presupposes that the transactions occur in the context of insolvency proceedings and concern the immovable properties of the enterprise or its establishments (enterprise).

16. On the question of whether the acquisition of immovable property for residential use, in the context of insolvency proceedings of a natural person, may be subsumed within the scope of the exemption provided for in article 270, no. 2 of the CIRE, our superior courts have already pronounced themselves on several occasions. On this question, see the jurisprudence of the Supreme Administrative Court (STA) set forth, among others, in the Rulings of 03-07-2013, in process no. 0765/13 and of 25-09-2013, in process no. 68366.[1]

Also within the framework of CAAD, this issue has been raised and was examined among others in arbitral processes nos. 95/2015, 649/2015 and 136/2015. In all of these decisions the understanding was to the effect of considering that the aforementioned exemption "does not extend to the sale of urban property intended for residential use that belongs to a natural person, it not being sufficient to benefit from that exemption the fact that it is acts of sale carried out in the context of the liquidation of the insolvent estate, but rather it must be demonstrated that the property sold is part of the assets of an enterprise".[2]

17. Now, the additional assessment was motivated by the finding, during tax audit, that the properties in question formed part of the insolvent estate of a natural person and not of an enterprise. Also, the dismissal of the Administrative Complaint, which preceded the submission of the present arbitral petition, had this basis, as results from document no. 7 appended to the arbitral petition. The TA sustains that only acquisitions of assets that, made in insolvency proceedings, have as their object the sale of enterprise assets, may benefit from the aforementioned exemption, that is, in the case of the case at hand, the acquisition of the property could only benefit from IS exemption if it formed part of the assets of an insolvent enterprise. And, unless I am mistaken, the respondent is correct in the understanding it draws from the legal provision to which it is strictly bound.

18. The STA pronounced itself in the same sense in the aforementioned ruling of 3 July 2013, rendered in process no. 0765/13, in which the question was to ascertain the exemption from Municipal Tax on Onerous Transfers of Immovable Property (IMT) provided for in article 270, no. 2 of the Code of Insolvency and Business Recovery (CIRE) in the acquisition, in the phase of liquidation of assets in insolvency proceedings, of an immovable property that forms part of the assets of the insolvent enterprise. And, in order to respond to the question, the Court considered that: "the question at issue in the present case is the interpretation of no. 2 of article 270 of the CIRE, and it is necessary to decide whether the provision should be interpreted to the effect that both the sale, and the exchange, and the cession, although comprised in the context of an insolvency or payment plan or carried out in the context of the liquidation of the insolvent estate, in order to be exempt from IMT, must necessarily have as their object the enterprise or its establishment, or whether, as decided, the reference to the enterprise or its establishments refers only to the cession, being also comprehended in the scope of the IMT exemption the sales and exchanges of immovable properties comprised in the context of an insolvency or payment plan or carried out in the context of the liquidation of the insolvent estate.

As is well known, between two meanings of the law, both with support – at least minimal – in its respective letter, the interpreter must choose that which is compatible with the constitutional text (interpretation in conformity with the Constitution), to the detriment of the interpretation that has the vice of unconstitutionality. (…)". In summary, while the Public Treasury defends a restrictive interpretation to the effect that no. 2 of art. 270 of the CIRE only covers onerous transmissions of assets that form part of the entirety of the enterprise or establishment sold, exchanged or ceded within the scope of the insolvency plan, the aforementioned ruling concluded that the most appropriate to the meaning and scope of the legislative authorization for approval of the CIRE would be to admit a broader interpretation so as to also include immovable properties that form part of the assets of the insolvent enterprise. In any event, for what is of interest to us in the case at hand, the point is that it must be immovable properties that form part of the assets of an enterprise and not immovable properties of natural persons, with the sole justification of being part of an insolvency proceeding".

19. In our view, the considerations expounded in the STA ruling cited are entirely transposable to the situation in the present case. In fact, the interpretation advocated by the Claimant has not the slightest support in the literal meaning of the provision, nor in the jurisprudence it invokes in its petition, which concerns the restrictive interpretation that the TA has been making of the provision contained in no. 2 of art. 270 of the CIRE, in recognizing the IMT exemption only in cases of transmission of the entirety of the assets of the insolvent enterprise, in total disagreement with the majority jurisprudential understanding.

It happens that it is not this issue that must be decided in the case.

In the present case the question is whether the sale of an immovable property that does not belong to an enterprise, nor was intended for the exercise of any business activity, but which was the property of a natural person and intended for residential use, with no proven commitment to business activity, may benefit from IMT exemption by virtue of having been made in an insolvency proceeding.

The answer can only be in the negative, since this situation is not subsumed within the scope of the provision of art. 270, no. 2 of the CIRE, which refers exclusively to the sale of elements of the assets of the enterprise.

20. The Claimant further alleges that the restrictive interpretation of the provision undertaken by the TA constitutes an unconstitutionality. Now, once again it is not correct, and the arguments it invokes concern the first interpretive issue of the provision and not the second, being that only this latter is relevant for the decision of the case sub judice.

It is not a question of whether the exemption should only be recognized in the case of transmission of the entirety of the assets of the enterprise or individually,[3] but rather whether it could extend to the transmission of immovable property not committed to any business activity in the context of insolvency proceedings of a natural person. And the answer to this question is in the negative in light of the letter of the law and all that serves as the rational basis for the regime instituted by the legal provision.

The resolution of the issue to be decided in the present case is, therefore, possible at the infra-constitutional level. From the text of the law (article 270, nos. 1 and 2 of the CIRE) it is possible to extract, without difficulty, a meaning compatible with the obligation arising from the legislative authorization law and the objectives of the law expressed in its preamble. It is indeed the responsibility of the legal interpreter, in case of doubt, to find the interpretation compatible with the text and constitutional requirements. We should not lose sight of the purpose the legislator intends to achieve with the granting of such exemption, which consists in promoting and encouraging the rapid sale of assets that form part of the insolvent estate of the enterprise, for faster and more effective satisfaction of the interest of creditors, the market and the general public interest, not forgetting the satisfaction of the State's own credits (tax credits and Social Security, predominantly). These are the reasons that led the legislator to grant the tax benefit of exemption from payment of IMT in the acquisition of these assets or of the entirety of the assets of the enterprise or establishments of the insolvent enterprise.

It is evident that, from the perspective of the legislator, identical reasons do not obtain with respect to the adjudication of immovable properties not committed to any business activity in the context of personal insolvency proceedings.

21. Thus, the interpretation of the legal text contained in no. 2 of article 270 of the CIRE can be interpreted in a clear manner and without difficulty, having regard to the letter of the law and its "ratio legis".

As decided by the STA Ruling issued on 25-09-2013, in process no. 866/13, relating to the exemption from Stamp Tax but which applies entirely to the case of the present proceedings, since the underlying question is the same:

"I - In accordance with the provisions of art. 269, paragraph e), of the CIRE, sales of "elements of the assets of the enterprise" are exempt from IS. II - Accordingly, the aforementioned exemption does not extend to the sale of urban property intended for residential use that belongs to a natural person, it not being sufficient to benefit from that exemption the fact that they are acts of sale carried out in the context of the liquidation of the insolvent estate, but rather it must be demonstrated that the property sold forms part of the assets of an enterprise."

Arbitral jurisprudence has pronounced itself in the same sense. Thus it was decided in process no. 13/2016-T, where it was concluded that paragraph e) of article 269 of the CIRE grants IS exemption to sales of elements of the assets of enterprises, and it cannot be understood to include here sales of assets of natural persons, non-entrepreneurs or holders of enterprises, since this is not provided for in the provision under analysis. And more recently, in arbitral decisions nos. 649/2015 T, 95/2015 T or 106/2016 T, where it was decided, in the same sense, on a question identical to that of the present case.

22. For all that has been set forth above, it must be said that the arguments presented by the Claimant regarding the alleged nullity of the tax act for not having a minimum correspondence in the law or the alleged creation of a real tax or contribution not permitted by law also do not proceed. As we have seen, the interpretation claimed by the Claimant, that one does not find correspondence in the law.

23. And finally, what is alleged regarding the violation of articles 140 and 141 of the Code of Administrative Procedure does not merit acceptance. The tax procedure obeys specific principles and rules, among which the circumstance is relevant that many taxes are effected initially by declaration of the taxpayer himself and only subsequently do the services verify (as it is their functional duty) the truthfulness of the facts and their verification in accordance with the terms and conditions legally established. In other words, it falls to the TA to ascertain whether the facts declared and which served as the basis for the prior non-assessment of IMT were verified in accordance with the terms and scope provided for in the law. This is what occurred in the present case. For this purpose the TA is bound by the deadlines and rules provided for the tax procedure, namely respect for the statute of limitations for the assessment of tax, which was observed.

Thus, since such is the case, no nullity of the act or voidability due to violation of any procedural principle in light of the rules applicable to the tax procedure is apparent, not applying to the case the provisions of articles 140 and 141 of the Code of Administrative Procedure.

24. Whereby, in light of all that has been set forth, it results that the challenged assessment does not suffer from the vice of error on the legal presuppositions, consisting of violation of article 270, no. 2 of the Code of Insolvency and Business Recovery, or of any other vice generating illegality that would impose its annulment.

IV. DECISION

Whereupon this Arbitral Tribunal decides:

A) To declare the arbitral petition wholly without merit, maintaining the challenged assessment in the amount of €1,405.27;

B) To condemn the Claimant to pay the costs of the present proceedings.

VALUE OF THE CASE

The value of the case is fixed at €1,405.27 in accordance with article 97-A, no. 1, a), of the Code of Tax Procedure, applicable by force of paragraphs a) and b) of no. 1 of article 29 of the RJAT and no. 2 of article 3 of the Regulation of Costs in Tax Arbitration Proceedings.

COSTS

The amount of the arbitration fee is fixed at €306.00 in accordance with Table I of the Regulation of Costs in Tax Arbitration Proceedings, to be paid by the losing party, in accordance with articles 12, no. 2, and 22, no. 4, both of the RJAT, and article 4, no. 4, of the cited Regulation.

Lisbon, 28 February 2017

Notify.

The Sole Arbitral Tribunal

___________________________

(Maria do Rosário Anjos)

[1] Both available at www.dgsi.pt.

[2] See Arbitral Decision no. 95/2015 T, available at www.caad.pt.

[3] With regard to this issue (transmission of the entirety of the assets of the enterprise versus isolated transmission), the TA itself has already changed its position, as results from recent Circular no. 4/2017 of DSIMT, anchored in the Ruling of the Secretary of State for Fiscal Affairs no. 14/2017 – XXI of 26 January 2017.

Frequently Asked Questions

Automatically Created

Is IMT (Property Transfer Tax) exempt for asset transfers in individual insolvency proceedings under Article 270(2) of the CIRE?
The exemption under Article 270(2) CIRE is disputed in this case. The Portuguese Tax Authority contends that the IMT exemption applies only to 'insolvent enterprises' (empresas insolventes) and does not extend to insolvency proceedings of natural persons (individuals). The claimant company argued it was entitled to the exemption when acquiring property from individuals in insolvency. The arbitral tribunal must interpret whether the statutory language restricts the exemption to corporate insolvencies or applies broadly to all insolvency proceedings regardless of the debtor's legal nature. This interpretive question is the central issue in CAAD Process 518/2016-T.
What legal grounds did the taxpayer use to challenge the additional IMT assessment in CAAD Process 518/2016-T?
The taxpayer challenged the additional IMT assessment on the grounds that the acquisition qualified for exemption under Article 270(2) of the CIRE (Insolvency and Corporate Recovery Code). The claimant argued that the Tax Authority illegally revoked an initially recognized exemption and incorrectly interpreted Article 270(2) as excluding natural person insolvencies. After paying the assessed tax, the company first filed an administrative complaint (reclamação graciosa) which was dismissed. Subsequently, the claimant filed an arbitration petition at CAAD under Decree-Law 10/2011 (RJAT), requesting declaration of illegality of the assessment, annulment of the dismissal ruling, and restitution of the tax paid with legal consequences.
How does the CAAD arbitral tribunal handle disputes over IMT exemptions related to insolvency of natural persons?
The CAAD (Administrative Arbitration Center) handles IMT exemption disputes through the arbitral procedure established by RJAT (Regime Jurídico da Arbitragem Tributária). In Process 518/2016-T, a sole arbitrator was appointed by the Deontological Council to adjudicate the dispute over Article 270(2) CIRE application to individual insolvency. The tribunal verified procedural requirements, examined the administrative file, and determined the case involved exclusively legal matters requiring interpretation of the exemption statute. Since no factual disputes or witness testimony were necessary, the tribunal dispensed with the oral hearing under Article 18 RJAT and proceeded based on written submissions and documentary evidence. This streamlined procedure is typical when arbitration concerns purely legal questions of tax exemption interpretation.
What is the procedure for filing a gracious complaint (reclamação graciosa) against an IMT liquidation by the Portuguese Tax Authority?
To file a reclamação graciosa (administrative complaint) against an IMT assessment, the taxpayer must submit the complaint to the competent Tax Authority office that issued the assessment. The procedure includes: (1) filing the complaint within the statutory deadline; (2) exercising the right to be heard (direito de audição prévia) before a final decision; (3) receiving a ruling on the complaint merits. In this case, the claimant filed the administrative complaint on 19-05-2016 after being notified of the additional assessment. The Tax Authority dismissed the complaint, maintaining that Article 270(2) CIRE did not apply to individual insolvencies. The claimant was notified of the final dismissal on 04-08-2016, after which it had the option to seek arbitration, which it exercised on 25-08-2016.
Can a company challenge an additional IMT assessment through arbitration at CAAD after an unsuccessful administrative claim?
Yes, a company can challenge an additional IMT assessment through CAAD arbitration after an unsuccessful administrative claim, as demonstrated in Process 518/2016-T. Following dismissal of the reclamação graciosa on 04-08-2016, the claimant company filed an arbitration petition on 25-08-2016 under Article 2(1)(a) and Article 10(1)(a) of Decree-Law 10/2011 (RJAT). The arbitration regime permits taxpayers to contest tax assessments and decisions dismissing administrative complaints. The petition was accepted, an arbitrator was appointed, and the arbitral tribunal was constituted on 18-11-2016 with full jurisdiction to rule on the legality of the IMT assessment and the administrative dismissal ruling. This sequential procedure—administrative complaint followed by arbitration—is the standard dispute resolution pathway for Portuguese tax matters.